A significant driver of top-line growth: Magna International Inc. (MGA)

Magna International Inc. (NYSE: MGA) stock fell -1.81% on Tuesday to $50.04 against a previous-day closing price of $50.96. With 1.09 million shares changed hands, the volume of the stock remained heavier than its average volume of 0.93 million shares. During the session, the Auto Parts company that operates in wider Consumer Cyclical sector, reached to the highest price of $51.99 whereas the lowest price it dropped to was $49.51. The 52-week range on MGA shows that it touched its highest point at $90.15 and its lowest point at $49.49 during that stretch. With its current market cap of 15.12 billion, MGA has annualized dividend of $1.80 while the current yield stands at 3.60%. Beta for the stock currently stands at 1.48.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of MGA was down-trending over the past week, with a drop of -7.83%, but this was down by -15.16% over a month. Three-month performance dropped to -13.65% while six-month performance fell -21.44%. The stock lost -36.30% in the past year, while it has lost -38.18% so far this year. A look at the trailing 12-month EPS for MGA yields 2.26 with Next year EPS estimates of 7.06. For the next quarter, that number is 1.17. This implies an EPS growth rate of 98.40% for this year and 48.11% for next year. EPS is expected to grow by 39.80% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of -0.60%.

Float and Shares Shorts:

At present, 291.10 million MGA shares are outstanding with a float of 287.08 million shares on hand for trading. On Aug 30, 2022, short shares totaled 3.86 million, which was 1.34% higher than short shares on Jul 28, 2022. In addition to Mr. Seetarama Swamy Kotagiri M.Sc. as the firm’s CEO & Director, Mr. Vincent Joseph Galifi B.Com., C.A. serves as its Pres.

Institutional Ownership:

Through their ownership of 67.06% of MGA’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 36.85% of MGA, in contrast to 25.44% held by mutual funds. Shares owned by individuals account for –. As the largest shareholder in MGA with 3.15% of the stake, RBC Global Asset Management, Inc. holds 9,209,984 shares worth 9,209,984. A second-largest stockholder of MGA, Jarislowsky, Fraser Ltd., holds 8,310,223 shares, controlling over 2.84% of the firm’s shares. RBC Dominion Securities, Inc. is the third largest shareholder in MGA, holding 8,045,301 shares or 2.75% stake. With a 1.27% stake in MGA, the Vanguard Windsor Funds – Vanguard is the largest stakeholder. A total of 3,725,732 shares are owned by the mutual fund manager. The Vanguard Total International Stoc, which owns about 1.24% of MGA stock, is the second-largest Mutual Fund holder. It holds 3,636,834 shares valued at 209.95 million. Principal Investors – Equity Inco holds 1.11% of the stake in MGA, owning 3,250,574 shares worth 187.66 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Jun 29, 2022, MGA reported revenue of $9.36B and operating income of $333.00M. It generated -$156.00M net income for the quarter, which came to $683.00M over the last twelve months. The EBITDA in the recently reported quarter was $718.00M and diluted EPS was -$0.54. EBITDA for the full year was $3.15B.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for MGA since 19 analysts follow the stock currently. There are 13 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 4 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With MGA analysts setting a high price target of $106.00 and a low target of $53.00, the average target price over the next 12 months is $75.76. Based on these targets, MGA could surge 111.83% to reach the target high and rise by 5.92% to reach the target low. Reaching the average price target will result in a growth of 51.4% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. MGA will report FY 2022 earnings on 02/24/2023. Analysts have provided yearly estimates in a range of $5.16 being high and $4.09 being low. For MGA, this leads to a yearly average estimate of $4.72. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Magna International Inc. surprised analysts by -$0.12 when it reported $0.83 EPS against a consensus estimate of $0.95. The surprise factor in the prior quarter was $0.19. Based on analyst estimates, the high estimate for the next quarter is $1.34 and the low estimate is $0.90. The average estimate for the next quarter is thus $1.16.

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